Maxim Integrated Products, Inc. (MXIM)

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Maxim Integrated Products, Inc. (MXIM)

Q4 FY08 Earnings Call

August 7, 2008, 5:00 PM ET


Paresh Maniar - Executive Director of IR

Bruce E. Kiddoo - VP of Finance

Tunç Doluca - President and CEO

Pirooz Parvarandeh - Group President

Vijay Ullal - Group President

Doug Freedman - American Technology Research

Christopher J. Neil - Division VP


Ross Seymore - Deutsche Bank Securities

Craig Berger - FBR Capital

Sumit Dhanda - Banc of America Securities

Mike McConnell - Pacific Crest Securities

Uche Orji - UBS

Romit Shah - Lehman Brothers

Manish Goyal - TIAA-CREF

David Woo - Global Crown Capital

Craig Ellis - Citigroup

John Dryden - Charter Equity Research

Craig Hettenbach - Goldman Sachs

Steve Smigie - Raymond James



Thank you for standing-by. Good day and welcome to Maxim Integrated Products Fourth Quarter 2008 Earnings Release Conference Call. Today's call is being recorded. At this time for opening remarks and introductions, I will turn the call over to Mr. Paresh Maniar, Executive Director of Investor Relations for Maxim Integrated Products. Mr. Maniar, please go ahead.

Paresh Maniar - Executive Director of Investor Relations

Thank you, operator. And welcome everyone to our fiscal fourth quarter 2008 earnings conference call. With me on the call today are; Chief Executive Officer Tunç Doluca, Group President, Pirooz Parvarandeh, Group President, Vijay Ullal, Division Vice President, Chris Neil and Vice President of Finance, Bruce Kiddoo.

There are some administrative items that I would like to take care of before we cover our results. First, we will be making forward-looking statements on this call and in light of the Private Securities Litigation Reform Act, I would like to remind you that the statements we make about the future, including our intentions or expectations or predictions of the future, including but not limited to possible statements regarding bookings and turns orders, revenues and earnings, inventory and spending levels, manufacturing efficiency or capacity, projected end-market consumption of our products, the estimated time to complete our restatement project and any other future financial results are forward-looking statements. If we use words like anticipate, believe, project, forecast, plan, estimate or variations of these words and similar expressions relating to the future, they are intended to identify forward-looking statements. It is important to note that the company's actual results could differ materially from those projected in the forward-looking statements. Additional information about risks and uncertainties associated with the company's business are contained in the company's SEC filing on Form 10-K for the year ended June 25, 2005. Copies can be obtained from the company or the SEC.

Second, in keeping with SEC's fair disclosure requirements, we have made time available for a question-and-answer period at the end of today's call. This will be your opportunity to ask questions of management concerning the quarterly results and expectations for the next quarter. And operator will provide instructions at that time. We again request that participants limit themselves to one question and one follow-up question during the Q&A session.

Before I hand the call over to Bruce, I want to remind you of the contents of our January 31, 2007 press release, which reported that due to stock option accounting matters, Maxim expects to restate its financial statements. Since the company has not yet issued restated financial statements, we are unable to provide detailed GAAP or non-GAAP financials for the quarter end fiscal year ended June 28, 2008. As a result, all numbers contained in our press release and discussed on this call exclude all stock-based compensation. These number should be treated as estimates only and are subject to change.

I'll now pass the call over to Bruce.

Bruce E. Kiddoo - Vice President of Finance

Thank you, Paresh. I will begin by providing a status of the restatement effort. Measurement based for stock option grants and the related accounting treatment have been determined.

We are in a final phase of the restatement process with three primary remaining task, finalizing calculations for stock-based compensation expense and the related tax impact, generating amended and updated 10-K and 10-Q financial statement, and completion of our procedures by our two independent accounting firms.

Presently no significant accounting issues or scope additions are pending with our auditors. So our completion is not dependent on external parties other than for the task described above. This remove the significant level of uncertainty and we are focused on completing the final free task as soon as possible.

Based on our progress to-date, we expect to record additional non-cash stock-based compensation expense during fiscal 1995 through fiscal 2006 of approximately $800 million pretax.

At the same time that our restated financial statements for such years are filed with the SEC. We've will file our annual reports on form 10-K for fiscal years 2007and 2008 and six quarterly reports on form 10-Q for the first three quarters of fiscal years 2007 and 2008.

Collectively these filings will bring us current with our reporting obligations with the SEC. Looking ahead, once we are current with our filings we are forecasting stock-based compensation expense in fiscal Q1 2009 to decline by a approximately 20% compared to stock-based compensation expense reported in our press release stated August 4, 2006 for fiscal Q4 2006.

Moving onto the results of our recently completed June quarter, let us start with certain items from the income statement.

Revenue for the fourth quarter was $501.3 million slightly above the midpoint of our guidance. This is 2.8% increase from the $487.4 million of revenue recorded in the previous quarter.

For the fiscal year ending June 28, 2008 the company achieved record net revenues of $2.051 billion. Our revenue mix by major end market in Q4 was approximately 31% computing, 26% consumer, 23% industrial and 20% communications.

In the computing market we had strong sequential revenue growth. As expected growth was driven by a key battery customers are recovering from his plant fire the ongoing land of our storage business continued share gains in the notebook display segment and the extension of the of the Santa Rosa platform.

In the consumer market our revenue grew enhance, that as expected. This was offset by general weakness in other consumer markets. In the communications market our revenue grew due to continued strength in the Asia infrastructure market. And finally in the industrial market our revenue was essentially flat inline with normal seasonality.

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